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Discussion Starter · #1 ·
We are closing on a new home 8-11-06, right now we are at a point where we can do a loan that is locked in for 3 years and then it adjust to the current int rate. I have a few small things on my credit which will be gone then. My question is - should we lock it in for good at 6.6 % now or do the loan that will adjust. No one knows for sure what the rates will do but my credit would be better.

Confused :) I will probably just lock the rate a 6.6% but was wondering what the pros and cons are
 

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Just because you lock the rate in at 6.6% doesn't mean you can't refinance later at a better interest rate if rates go down...unless there is some weird wording in your contract about early pre-payment or something.


Lock it in now. That's a good rate for someone without A+ paper.
 

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how long do you anticipate being in the home? if the time frame is 5 years or greater, i would recommend a fixed rate and not an adjustable. when refinancing you will have to determine the costs / benefits - how much is it going to cost and how much will be saved. rates have moved in our favor the last week and depending on the credit a 30 year fixed is ~ 6.375 - 6.625. if there is not a prepayment penalty and rates were to fall, you could take advantage of the opportunity.
 

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Discussion Starter · #5 ·
I think we will be there for 5 years but who knows, we have a sit meeting with our Mortgage lady this week and I guess she will go over all of our options
 

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mortgage company

Not meaning to hijack your thread or anything neckdeep, but do we have anybody on this board who actually works for a mortgage company?

In the process of selling my house right now, so i'll need a good mortgage company soon enough.

Todd
 

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In order to avoid the uncertainties of the adjustable rates period in adjustable rate mortgages (ARMs or Hybrids), I always recommend fixed rate products first. During the adjustable rate period, monthly payments will be calculated by using an interest rate based on a moving financial index. The most common of these indexes are Treasury Indexes, LIBOR, and others. The most well known is the Prime rate index--the one primarily used on new construction loans.

If any of these indexes rise as they have recently, monthly payments on ARM mortgages will rise accordingly. So just be careful of these. Sometimes when credit is an issue, it makes more sense to obtain a lower rate on an ARM fixed for two or three years and refinance when the credit issues are resolved. But again, just as Marlintini states, the costs/benefits of refinancing should be carefully considered, and considered prior to entering the ARM instead of at the time of refinance.
 

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Woody said:
Not meaning to hijack your thread or anything neckdeep, but do we have anybody on this board who actually works for a mortgage company?

In the process of selling my house right now, so i'll need a good mortgage company soon enough.

Todd
my Mom is a lona officer. She's helped several of our 2coolers. PM me if you want her contact info.
 

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Todd, I work for and own the mortgage company reliafunds.com (don't be fooled, we're a very small company -- 2 people -- with big ambitions :D ). I am in austin, but because of previous contacts and some advertising, I close more loans outside of austin than here in town. Actual signings of the loan papers is completed at a local title company, and the whole mortgage part of the process is done via the Internet (how we "met" :) ) and usually a single mailing.

Paul Jendrzey
 

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Good morning Todd. Like Red, I am a small shop here in Houston. 100% Refferal. Except for the banner I sponsored here at 2 Cool but Mont never got my check (Mont I will call you later, it's my fault). I am quoting 6.50% on 30 year fixed (good credit and at least 5% down), like I am sure that Todd is (right Todd? These are 2 Coolers, family!). There is so much mis-information and bait and switch tactics out there. Remember the TV and Radio adds about all of those "exotic low intrest rates and low payments" a couple of months ago? Now they want to refinance you into a program that a reputable Broker would have put you to in the first place. Stock Brokers call that "Churning" to generate commisions. *LOL* ALWAYS ask the questions about your loan terms and get it in writing when negotiating with anyone (including me). If you do not understand the terms, make sure that keep asking until you are completely satisfied, AND MAKE SURE THAT IS WHAT YOU GET WHEN YOU SIGN AT THE TITLE COMPANY. IF IT IS NOT WHAT YOU EXPECTED, WALK AWAY, DO NOT SIGN, YOU ARE NOT UNDER ANY OBLIGATION TO ACCEPT THE LOAN OR TERMS UNTIL YOU SIGN. REPUTABLE BROKERS WANT THE RIFF-RAFF OUT OF OUR YARD! YOU ARE NOT UNDER ANY OBLIGATION TO SIGN ANYTHING YOU DO NOT FEEL COMORTABLE WITH. Look at the terms of your loan, is there a prepayment penalty? How long is the interest rate guarenteed, Ect? If you have any questions please feel free to call me at (713) 862-2006, or contact Todd as I have seen his post here before and I feel confident that he is a reputable Broker as he is a fellow 2 Cooler! Purchasing a home should be an exciting and enjoyable experience.

Tom Peden
 

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Hey Neckdeep. Please feel fee to kick my soapbox out from underneath me, and I apoligize to the board *LOL*. I'm sorry but, by you question, it sounds like you do not understand the terms of your loan. I have proudly served on the STATE board of the Texas Mortgage Brokers Association and STRONGLY believe in consumers rights and full disclosure. It sounds like you have agreed to a 3/27, which means that your loan wil be amoritized over 30 years, with the first 3 years fixed at a rate of 6.600%. After three years it will be the rate will be a varible rate of ?????? You need to ask yourself, how long will I be in my home? What intrest rate risk am I willing to take (rates going up or down)? Once again, I apoligize to you and the board, it's late (I did not get home from the office until 11:30 pm), but I hear so many horror stories and mis-information, I felt compelled to add my humble 27 years of experince to the thread. 2Coolers are a family. I am sure that we will all meet face to face one day and I want a handshake, and not hear, "where were you"? There are a lot of great and honest Mortgage Brokers out there (several on this site!). It is most people's largest investment and it is up to YOU to do your due dilligence and be an informed consumer. OK, I feel better now. :) Enjoy your new home and have a blessed day!

Tom Peden
 

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Why would anyone want to get an ARM? Isn't a fixed rate just as easy to get and much safer in the long run? All my first loans are 15 year loans. Isn't it always wise to at least look at getting a 15 year loan verse a 30 year? I just bought a rental property last year on a 10-10-80 becaused I got a better rate than a 5- 15-80 or 5-85. I am ready to buy another and again was told I will get a better rate witha 10-10-80. I know there are alot of options out there. Did not mean to hijack the thread just wanted to bring up some discussion on options.

Later, Ken
 

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LOCK IT!!!!

If the monthly payments are something you can handle. Go for a 15 year note if you can! I did an arm (I owned another house & could not qualify for a fixed rate mortgage on the #2 house) & for 2 years I could not refinance because there was a penalty for paying off the loan & it did not make it worth while to refinance & pay the penalty! I also could not get the house to qualify for the larger loan amount to wrap the penalty into the new loan because they could not see how the property had gone up so much in such a short time. (2 years) Now my Arm is matured & it is going up to 11.125%! So I am trying to refinance now & am having a problem with a couple of credit issues on my credit report that are taking time to remove. This brings me to a rate that is lower than the 11.125% but still higher than I wanted.

Yes you can refinance a fixed rate but do not bank in the intrest rate going down any further! Your rate at 6.5% is pretty good!

If this is your first home be sure you ck into the 1st time home buyers incentives.

LOCK IT!!!!!

Just my 2 cents.

Good Luck & congrats on your new home!
 

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Yes

Woody said:
Not meaning to hijack your thread or anything neckdeep, but do we have anybody on this board who actually works for a mortgage company?

In the process of selling my house right now, so i'll need a good mortgage company soon enough.

Todd
Yes...you can call 979-429-1955...ask for Danny or Carla
 

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No soapbox tonight. :) A lot of good questions and good tips. By the way I own a mortgage company here in Houston and loan any where in the state. If anybody wants to contact me for help or advice, my office number is 713-862-2006 or my cell 832-618-3777 (Woody). In response to some of the earlier post, I recommend that a person get the shortest term they can comfortably afford and select a fixed rate. This is the most conservative and safe option. There are siutations where an ARM or IO loan is appropriate, but with a well thought out plan and a certain level of expertise (FishinH2O). Most "First time home buyers" programs are a marketing gimic and offer no real benifit (FishinH2O). 80-10-10 (80% First loan with no PMI and 10% second loan with 10% down) and 80-15-5 (same senario as the 80-10-10) are now offered at the same price as a one loan program. The only type of CLTV (combined loan to value) loans that I see priced higher are the 80-20 loans (100% loan). The advantage of the two loan scenarios is that the borrwer do not pay Mortgage Insurance (which is not tax deductable) and can apply extra payments towards paying off the smaller second lien loan amount, thus building equity quicker and maintaining the intrest tax deduction (Kraymond). Rates are still very low and stable.

Tight lines! Tom Peden
 
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